My Financial Tips

The financial crisis that is currently gripping the UK stemmed from a reliance on ‘bad’ debt. The downfall to the economy began when some United States banks lent money to citizens to purchase property. These borrowers were categorised as ‘high risk’ as a consequence of issues such as low income or tenuous employment status; these issues were not identified as negating factors in mortgage allocation and subsequently, high risk lending continued with some banks continuing to supply hundreds of thousands of dollars to people who were simply unable to pay off the debt.

Initially properties whose owners were not able to meet the mortgage payments were repossessed and put back on the market; however, this led to conurbations becoming almost desolate with a multitude of houses with for sale signs pitched outside becoming a common occurrence. This compounded the problems further and culminated in many homeowners who were able to maintain their monthly repayments losing value off their property, until ultimately they found the price of their house’s reducing to such an extent that they ended up in negative equity and unable to sell.

The banks were unable to recoup their losses; they were not able to pay off the large amounts of money that they had borrowed of other financial institutions. Their lubricous attempts to make millions of dollars profit on the back of high risk borrowing backfired on a scale not seen since the recession of the 1930’s. The healthy bonuses that high flying graduates once collected frequently bit the dust as some of the biggest US financial institutions creaked at the strain of bad debt.

The negative effect of the bad lending rippled out to other nations and this, coupled with a global economic downturn and increasing unemployment within the UK manufacturing sector led to some commentators declaring recession. Some major institutions have fell victim to the recession; Woolworths is currently dying a slow death as once faithful customers’ circle the aisles like vultures eyeing up their prey. Some bargain hunters have even had the temerity to complain to long serving members of staff about the lack of discount being offered with little thought that the store, and indeed some of the staff, had been around for many years.

So how does this affect the average person? I have spoken to some who insist the recession is media led; indeed, some have said the media has been a significant contributory factor in fuelling the flames of panic, and, some might say, ‘recession hysteria’. Within the United Kingdom it appears like the media has ran with the recession story for some time now.

Almost every day in newspaper and radio stories feature recession themed headlines. This may have led to some people doubting recession as they have not directly been affected. This however has recently changed as the Prime Minister lowered VAT to 15%. Every person within the UK who purchases almost anything from anywhere can is experiencing and is subsequently become affected by the Governments response to the UK’s economic slowdown.

Gordon Browns once rigid fiscal handling has turned on its head with what some may is a massive gamble. Germany has recently commented that the UK’s response to lower the VAT rate, in return for increased borrowings in the future as a measure to stimulate the economy may prove unsuccessful. Personally I would not be attracted into a shop to purchase an item, simply on the basis of a 2.5% reduction and I would consider this to be a political move with little substance.

Frivolous borrowings will certainly increase at this time of year as people try and sustain the festive spirit by purchasing needless items for distant relatives. Credit Cards, Payday loans and increased overdrafts are just some of the methods to obtaining credit; however, a word of caution is needed. The times of easy credit whereby banks and credit card companies threw money at all those that requested are but a distant memory. Despite the Global financial crises that is even affecting once deemed untouchable nations such as India and China, recession is here and indeed, pertinent to us all.

Refinancing your mortgage loan can save money and make your budget more manageable. There are disadvantages and risks associated with refinancing your mortgage; the main disadvantage is that you are back to square one with your loan amortization.

This means your payment will primarily go to interest and you will build very little equity in your home.

The mortgage disaster has just begun. There may have been thousands of homes throughout the country that would not have been built if not for risky lending practices. An unrealistic supply curve has caused the price of homes to fall dramatically. The result is a devalued real estate market financed by middle America: the group who will realize the greatest losses.

It may be that thousands of people are entitled to a refund from their mortgage lender, or some type of loan adjustment.

Many mortgage holders are finding their current mortgage deals coming to an end and are thinking about moving to a new mortgage to save outgoings.

Well it looks that if you can reduce your monthly mortgage costs by 0.5% then you could be saving yourself a lot of monthly expense. This could be a saving that you can spend elsewhere or if you are unlucky and expecting a huge rise in mortgage costs, just a reduction in the increase of the monthly cost.

Using mortgage comparison tables tell you what mortgage is the cheapest on the market right now, but is it right for you? More importantly, will it actually reduce your expenditure in the long term?

Although interest rates have crashed at the moment and are expected to stay low for some months, some experts believe a reduction is on the cards in the short term. So if you lock into a 2-year, 3-year or longer fixed mortgage rate, by the end of the term you might be paying more than a variable mortgage if you had stuck it out.

On the other hand, we could be surprised by a recovery and interest rate rises and then you would be in pocket. That’s the nature of this game. But this isn’t the only area in which you could be spending a lot more than you need to.

Look carefully at those best remortgage offers that you see in mortgage charts and read the small print. Look for the upfront fees - arrangement fees, legal fees etc. Take a look at your existing mortgage, how much is involved in closing that? There may be exit and deed release fees. These fees may also exist in the new mortgage - are they significantly higher than the current mortgage - that’s equivalent to a cost in the future?

When you look at these fees, how much will you be paying to switch your mortgage? Many building societies allow you to add this to the borrowing, but then you are paying extra interest on them for the life of the mortgage. Even more outgoings each month!

If you are able to pay these fees at the time of the move then in the long term that way is going to be more cost effective. But then look at your existing mortgage. If you are having to pay ?2,000, maybe even more to swap mortgages, could you instead pay off a small chunk of the mortgage, or at least put that cash away in a high interest account instead? Then take a look at how that would offset your payments - or work out what your net payments are after the money put aside earns some interest.

Changing to a new building society may not always be the right thing to do. First, speak to your building society and see what monthly charges they can get you down to with your existing mortgage. Then, instead of relying on tables to compare the best mortgage rates, speak to a few mortgage brokers and get them to do all of the leg work for you and write down exactly what you will be left paying each month.

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A great way to produce a long-term income flow is annuities investment. Annuity investments take a longer time than some other forms of investment that’s why those who are looking for shorter term investments may not want to use annuities as their primary option, or perhaps not at all.

If you are interested in this kind of investment you should know the following few things. So, annuities are funded by a pool and the pool is contributed to by many investors. The quantity of money each person (or investor) contributes to the pool is called a “premium”. How much each person’s premium is would be spelled out in the annuity investment contract that can be complex and that is one of the major reasons why it is valuable for you to consult with a financial advisor.

Another thing to know is that other fees will apply for example administrative fees which are paid to the financial institution or insurance company that will administer the annuity. These companies invest the money from the pool and generate a profit. It means that you would get a portion of the profit, as would the company doing the administering. All information, considering how the pool funds would be dispersed and when, is in the contract. The annuity contract will also determine how long you will pay premiums and how many premiums you will be responsible for paying the fund administrator. The sum of money your annuity investment is worth is a combination of premiums that have accumulated and the amount of money the pool has earned, without any administrative fees that have been paid out of the pool.

There exist some annuity investments that allow the benefit of taking money out of your accumulated value prior to the payout period actually starting. You might understand that this decreases the value available to you when the program does reach the payout phase. Another important thing to keep in mind is that taking any amount of money prior to the payout period you may be subjected to certain charges, such as “surrender charges”. Simply saying it means that the earlier you withdraw money from the funding pool, the more likely it is you will erode your investment long-term.

You should understand annuities before you decide on annuity investments. In order to do this you need to get answers to a few basic questions, like: “What charges or fees (load) you will be responsible for with the specific annuity investment contract you are considering?”, “How is the investment administrator going to earn the interest for the annuity investment fund pool?” “Along with how much it pays at payout”?, “How long is it going to take to see the payout phase?”, “How much are the premiums?”, “How often are they paid by you and how are they paid?”

You should always make sure that the annuity investment meets your goals and for this purpose you should do your homework, go shopping and make sure the annuity investment plan payout is the amount and at the time you need. It is also very important to check out the company that will administer your annuity investment and to make sure the annuity contract allows you the freedom you want in terms of early withdrawals.

Annuity investments are especially suitable for those people who are looking for a long-term investment with a guaranteed stream of income for a specific goal, like a college education or retirement.

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First of all you should know that asset management is a careful process of mixing the right balance of stocks, bonds and cash reserves for the purposes of retirement or long term investing. The ultimate goal of asset management is to have a portfolio that can withstand a downturn in any sector. With limitless variables in the markets, you’ll find that a single investment could drop in the double-digit range. Let’s remember the internet boom of the 90s and the stock market crash of 1929, and you will see that both events created a fear among investors that made it scary for market investments. Though, it doesn’t mean that the bond market is immune from radical changes. For example, in the 2000s, the bond market went through a tremendous drop and the reason was a rising interest rates.

Is it possible to protect yourself from dropping bond prices in your asset management plan? Yes and here are some ways to weather major downturns in the bond market.

1. Understanding Interest Rate Risk

Firstly you need to understand interest rate risks with bonds before you address methods to protect yourself. Interest rates for bonds fluctuate like stocks. It means that the bond par value that is like the stock price can go up or down based on demand in the bond market. Demand is determined by how valuable a bond is for someone at a certain interest rate. The investment should go higher in the case that the bond provides a great rate in an environment where interest rates are going down. And conversely, in the case that the bond has low interest rates, while interest rates are rising, the par value would go down.

2. Money Market

You should consider money markets if you want to dramatically reduce interest rate risk. These investments buy ultra short term bank paper or debt instruments for corporate and municipal borrowing and they generally have a maturity of 30 – 60 days. The price of a money market usually stays at $1.00 due to the low risk of default.

3. Short Term Bonds

Short term bonds have a shorter maturity and they provide less volatility versus long term bonds. Long term bonds would face a steeper drop than a short term bond, if interest rates were to go up. The reason is that long term bonds hold more risk as we do not know what the interest rates for borrowing would be like for, for example, the next 30 years.

4. Treasury Inflation Protected Securities (TIPS).

Treasury Inflation Protected Securities (TIPS) are a great way, for responsible asset management, to hedge interest rate hikes in asset management. For bonds, usually, as inflation rises, the prices go down and now you have a bond that can do the opposite. Treasury Inflation Protected Securities are investment vehicles by the US Treasury that make it possible for you to respond to inflation increases. The investment vehicle holds bonds with part of the assets that responds to inflation. You should also know that TIPS may not be perfect for everyone. It means that they might not necessarily correspond to interest rates as they are pegged to inflation. And even more, they may not provide returns, like a treasury bill does, and the inflation-based protection is the reason.

So, if you feel that bonds are becoming too risky you can use these few mentioned alternatives of the investment.

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Today a lot of people are searching for good safe investments. People work hard in order to earn money and to provide for their families’ well being and security and for the future too. There are many safe investment options available for you and it’s up to you which one to choose.

The stock market gives a lot of possibilities and any money you put into an account or stocks is likely to be safe. But you should bear in mind that it is not always easy to find out which of these stocks good investments are and which are not. Of course, it is possible for you to observe the general rule that is stocks with fixed and low percentage return on your money are likely to be secure. As concerning high risk stocks and shares, they yield better returns but have a higher risk.

The other good safe investments are the Federal Government investment schemes. The three kinds of treasuries are similar and only differ in the length of term. Treasury Bills term range from one year to less. It works in the following way: you are offered Notes from one to ten years and Bonds for ten years and longer. Generally, the government uses the money you paid for these treasuries for investment and guarantee you a fixed interest rate in return. So, you have the full faith backing of the US Government but this interest rate is not high.

The Government Agency Bonds is also the option for good safe investments. They offer a higher interest rate but they are also a little bit more risky. It means that you are not guaranteed with the ‘full faith and credit’ backing of the US Government, but with the Government Agency Bonds, you are sure investing in some of the best safe investments. A good point about treasuries and bond is that they are exempt from state and local taxes.

The other safe form of investment is Real estate. And the reason for this is very simple and understandable – this market is never going to disappear. This type of investment involves knowing about what it takes to get the house or property that has a commercial and thriving value.

Certificates of Deposit can also be considered as a good place for investments. To make it clear, it’s just like giving a loan to a bank. You can be sure of getting some returns continually with some ROI percentages with your money in a stable banking system. The fact that CDs are insured makes it a really good and safe place for your investment.

The main thing to remember is that you should always get some professional advice in order to have the best decision as you wouldn’t like to risk losing all your money.

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Law Firm Backed Loan Modification Company LoanModUS.com has recently announced the completion of its availability of free sample hardship letters for the purpose of Mortgage Modifications. Hardship letters are an essential and extremely important aspect of a successful loan modification. In an effort to help all homeowners going through the loan modification process, LoanModUS.com is offering free PDF files of sample hardship letters.

“Every day in this troubling economy, more American homeowners are seeking the assistance of a loan modification company.” Says President of LoanModUS.com, Aaron Landreth. “Homeowners will benefit from free sample hardship letters in order to help write an effective hardship letter that will result in a successful loan modification.”

Hardship letters are instruments that detail evidence to a lender of a homeowner’s current financial hardship. In order for a lender to consider a case for a loan modification, financial hardship must be outlined honestly in a hardship letter. Examples of such hardship are but limited to: cut in pay or work hours out of your control, an Adjustable Rate Mortgage that has risen beyond affordability, loss of work due to injury, or an unexpected loss in income due to a slowdown in the economy.

These items must be included in your hardship letter
• Brief and to the point
• Detailed, not vague.
• Write with gut wrenching emotion (A person is reading who will feel your pain!).
• Explain why you have fallen behind with your payments and the dates that concur with this period.
• Show how you are willing and able to keep up with new payment terms and your desire to remain in your home.
• Thank them for their time and consideration.
• Leave your contact information

Some GOOD EXAMPLES to include in your hardship letter are:
• Medical issues that prevented you from bringing in usual income
• Decrease in salary or hourly pay
• Loss of employment
• Fixed income such as Social Security of Child Support

BAD EXEMPLES:
• Facing legal issues
• Divorce or separation
• You are paying for school (for you or a son/daughter)
• You are overextended
• Threatening to file bankruptcy

LoanModUS.com is a legal loan modification company backed by a team of lawyers dedicated to helping American homeowners keep their home and lower their monthly mortgage payment. Unlike many loan modification companies, LoanModUS.com never asks for money up-front. They also offer a money back guarantee, and the ability to track your loan modification online. LoanModUS.com offers legal, proven and successful loan modification services.

Having negotiated hundreds of successful loan modifications, LoanModUS.com has helped numerous families retain their home, lower their rate, lower their monthly mortgage payment, and decrease the financial stress associated with facing foreclosure.
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Today a lot of people are searching the ways to ensure their financial security in retirement without subjecting themselves to the vagaries of the stock market and that is the reason that self directed IRA real estate investment has taken a prominent role as economic worries mount in today’s market. It means that people find out that real estate investing is the smart way to go.

First of all you have to make sure that your funds are in a self directed IRA account, it is necessary to successfully invest in real estate. Remember, that this is really useful as it will free you from the constraints of dealing with brokers or companies who put their own interests first but for individuals who feel they need some help with their money, it is possible to use the services of a custodian, that is an experienced financial advisor who can give you proper direction and answer all your questions.

The other important thing tat should be bared in you mind is that the buyer must be cautious as it is needed with any financial transaction. Self directed IRA real estate investing can be a tremendous asset, but only in the case if you choose the right custodian to help oversee your account. There are situations that some custodians can hit you with high earned interest rates, draining your un-invested cash balance, which is the money you need to oversee properties purchased and owned by your account.

It is very important to choose the right custodian, as is being aware of the IRS rules governing IRA real estate investing. If you will need to roll over your account to provide funds for your un-invested cash balance, remember that you are able to do so only once a year.

You can make various kinds of real estate transactions and they are governed by appropriate rules. Self directed IRA real estate transactions can never involve pieces of property that you use yourself. Only the account can benefit from the property, therefore you and your family may not make direct use of any properties purchased. Real estate investing can be a very profitable prospect if you can manage to work your way through the rules and regulations and make the right choices. If you will buy up properties and make a profit either through rent or resale you IRA return can raise a lot and the amount of increase can be more than double that of an ordinary IRA account.

Real estate is a concrete investment and it is much more stable than investing in stocks and bonds.

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Your business is struggling. You’ve been turned down by the banks. And your brother in law won’t take your calls. What do you do? Many small businesses are forced to go get a merchant cash advance, also known as a merchant advance or merchant cash. This may be a reasonable solution for survival or growth despite the high costs of this business capital.

Can you afford to pay the merchant advance back. The answer will be very different for every business. You must assess the costs carefully and decide if your projected future sales will allow you to meet the repayment terms.

These high-cost cash advances are only made for businesses that do at least $3,500 monthly credit card sales. The merchant advance amount is based on the average monthly total credit card sales. This is done to help ensure merchant funding companies that they will get repaid. Typically, a funder will advance a merchant between one to two times the average monthly credit card sales.

Let’s look at an example of a Merchant Cash Advance to understand the costs. One important point that is often overlooked is this: A Merchant Advance is NOT a loan. The cost of funds for an advance would be considered usury by every U.S. state if set up as a loan.

If you take a merchant advance for $10,000 you will typically be contractually obligated to pay back between $13-15,000 for the advance. Most merchant cash agreements are set up for periods of four months to one year. The longer the term the higher the cost of funds. Clearly, 30% to 90% annual rates seem too high.

The reality is also clear. The merchant funding companies must take extremely high risks in this high-default industry. The banks and other traditional funding sources won’t touch this kind of risk. These advances are not loans. A merchant cash funder agrees in writing to buy a specific amount of your future credit card sales at a discount.

In our example above he is buying $13,000 of your credit card sales for the next 4 months by advancing you $10,000 now. Or you may need more time and he agrees to buy $15,000 worth over 12 months for the same $10,000. The funder will require the merchant account or processing company to “holdback” or reserve the agreed on percentage of all your daily credit card sales to pay directly to the funder’s company until he is paid.

This holdback will often range between 5% and 25% of your credit card sales. Let’s assume your cc sales are $12,000 monthly and your holdback is 20%. Then you must pay $2,400 per month until the advance is paid off.

The good news for merchants is you do not have to personally guarantee a merchant advance, no collateral is required and poor credit by itself will not disqualify your application. The most important advice I can give you is to do your homework by asking questions. It is critical you understand the risks of a merchant advance and make sure you can afford to pay it back.

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If you spend your time working hard to earn money for the security and well being of your family, not only for the present day, but also for the future, then you will probably been keen to invest some money and hope that you see a good return. There are different kinds of investments and some of them are risky and some are safe. So if you deal with investments you should know which one of safe investments are the best.

First of all you need to remember that any money that are put into an account or are used to buy stocks with is going to be safe. But the point is that it is not always easy to find out which safe investments are the best and which one are considered as high risk. Here should be mentioned so-called general rule that the investment will be secure in the case that the percentage return on your money is fixed at a fairly low rate. In the case you purchase high risk stocks and shares, the return will be potentially a lot higher and also it is possible to end up with nothing at all.

The investment scheme that is provided by the Federal Government is rather secure. In order to know more about which are the best safe investments, you should have a look at the Government Treasuries that are of three types. All of them are similar aside from the length of the term. Treasury Bills have a term length of one year or less, Notes are offered from one to ten years and Bonds for ten years and longer.

You should also be aware of that Government Agency Bonds are a little more risky but offer a higher interest rate. They are still some of the best safe investments available though they do not carry the same ‘full faith and credit’ backing of the Government. There is one disadvantage that you may be concerned about with GABs and it is the possibility of the loan associated with your investment being prepaid. You may find the life of your bond is decreased and no further interest paid upon it in the case that this loan should be paid early and this falls during the allowable call period of your investment. Another important fact is that both, treasuries and bond, are exempt from state and local taxes. Of course there exist also other safe investments that come with the backing of the Government, but those two, mentioned above, are the most common ones.

In conclusion it should be mentioned that any schemes that carry the guarantee of the Federal Government is considered to be the best safe investments as using it you can always be sure that your will have a safe and secured return on your money.

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In this great time of economic uncertainty, there are many things you can do to protect your financial investments. Don’t sit back and let your portfolio get creamed. Instead, do something about it! Here are some things you can do now:

1. First, review your portfolio with your Savannah financial planner to get a baseline of where you are at. If you don’t have a financial planner, then gather all your brokerage statements, and 401k statements, and make a chart or snapshot of all your finances.

2. Evaluate your long term goals. Do you need the finances now? In 5 years? In 10? What financial services do you need? Write down a list of what you will need the money for, when, and how much.

3. Determine how much money you want in safe investments. Safe in this case means capital preservation. This is the money you definitely want to protect.

4. For your safe money, you could invest it into gold coins. Metal will always have value. Or a metals ETF can also work.

5. Another place for safe money is to move it into other currencies like the Euro. This way you are diversifying your assets and getting out of the U.S. dollar. You can buy currency shares from your broker through various ETF’s. That is the simplest way to get into other currencies.

6. You can also purchase U.S. treasuries. The only way these will decrease more than $250K into each CD. In fact, we encourage putting less than $250K since you want to leave room for the interest to accumulate and still stay under the $250K. Also, if the CD will be maturing AFTER January 1, 2010, then do not put more than $100K into any one CD, as the FDIC limit gets reduced from $250K back to $100K after this time.

8. Run from buying corporate bonds. It may look tempting, with the rates and all, and even a AAA bond may look safe. However, as we have seen lately, one cannot always trust the bond rating. If you want to be safe, do not invest in corporate bonds.

9. For your stock investments, hedge them by buying a put option. A protective put option acts like insurance for your portfolio. It is a wonderful way to protect gains you have in either a stock or across an index. This will save you in case the market goes down. You have to make sure that your brokerage account is setup to trade options. Purchasing a put option is a very low risk strategy which your advisor can set up for you. Just make sure that the put option you purchaserepresents your underlying stock holding. For example, if you own an index fund like the S&P 500, you would getSPX Put Options. If you own a lot of tech shares, you might consider buying Nasdaq put options (QQQ).

10. Lastly, get a good financial planner in Savannah.

If you do the above steps, your [spin]stocks and bonds will be much more protected than they are now. You will probably be able to [spin]rest better too not worrying about them either.